|The Leather Industry Still in Transition
Transition was definitely the underlying theme of the 19th All China Leather Exhibition (ACLE) held in Shanghai from 31 August to 2 September 2016. The event was also a demonstration that when this industry decides on a goal, it has the capacity to bring its sectors together and work collaboratively towards it. Hence, the significant presence of chemical suppliers and leather manufacturers taking advantage of ACLE to launch new products and applications and at the same time benefit from the flow of professional buyers from China and overseas.
The exhibition was held in the context of the upcoming G20 Summit scheduled over the following weekend in Hangzhou, which not only provided pleasant “G20 blue skies” in Shanghai, but also generated high expectations from the exhibition’s participants. At a time of stagnating growth and protectionist backlash across the world, defending free trade is key to the future of all industries including that of leather.
As the fair got underway the official press conference was held and the highlight was the presentation on the status of China’s leather industry by Mr Su Chaoying, Honorary Chairman of the China Leather Industry Association (CLIA).
First half results for the imports of semi-finished leather in 2016 showed a decline of 10.8% in volume and in the case of finished leather the decline was even sharper at 20.5% compared to the same period in 2015.These two figures are evidence of weak demand from Chinese tanneries and manufacturers as China’s leather industry is in a transitional phase which will take two to three years to complete, according to Su’s presentation.
Thus, with ACLE taking place with the backdrop of weaker demand for imported leather in the world’s biggest user country and weak consumer demand in developed nations hitting even the results of luxury brands, it was hardly surprising that the fair did not live up to expectations of some international exhibitors.
The perception was a lower flow of visitors in the international halls (E1 – E3) although this was compensated somewhat by more Chinese buyers in the domestic halls which had seen a solid increase in local exhibitors (+22.4%) compared to 2015.
Comparative Exhibitor Numbers 2015 v.s. 2016:
Overseas visitors decreased in number by 405 compared to 2015 but were more than compensated by visitors from Mainland China’s principal manufacturing provinces that rose by 3.07%. This indicates that China has not come to a standstill but at worst is in an economic slowdown as has been widely reported in western media for many months.
Another reason for the increase in Chinese visitors could be the steady rise in business confidence of the private sector during the last six months as reported by the BBC a few days after the 2016 edition of ACLE had closed its doors. The result was that the negative economic backdrop did not deter local buyers whose numbers increased by 8% on Day 1 of the fair and provoked favourable comments from Chinese exhibitors interviewed.
Despite slower economic expansion in recent months the commitment of China’s leather industry to remain a reliable engine of growth has not wavered, according to Su Chaoying. The major targets set for the year 2020 outlined in the 13th Five Year Plan for China’s leather and footwear industry include an annual growth rate of 7% in sales revenue; an annual growth rate for R&D investment of 10%, and an increase in market share of exports to developing countries of 55% - up from the current 49%. Optimism also prevails in the automotive upholstery leather sector with 6% growth in car sales anticipated this year.
“The economy is shifting from export-led, investment-fueled growth to innovation and domestic consumption-driven growth which has brought new challenges to China’s leather industry, but the footwear and leather industry is ready to give answers to its highly demanding consumers,” he said, quoting as an example the Chinese brand “Saturday” which invests significant amounts in innovation and design.
“The industry is in a period of transition but is already on its way to normalisation and I expect the situation to stabilise over the next two to three years,” Su concluded.
Watch the full exclusive interview with Mr Su Chao Ying >>>